More use of the big lie: shifting the blame for the housing crisis

Summary: Weakness always produces aggression by the strong, and we have chosen to be weak. In America the mode of conflict is information. Conservatives have worked long and hard on their information programs (aka propaganda). Their decades of skillfully conducted work have earned large rewards, advancement of their policies to the benefit our ruling elites. This is another chapter in a series about the origins of the housing crisis (links to the others appear at the end).

“Facts are stubborn things,” said he, “and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.”
— John Adams argument in defense of the British soldiers accused in the Boston Massacre, 4 December 1770

Propaganda works through many channels. New viewpoints seep into people’s minds through repetition. Large scale lying saturates our mindspace, and keeps the opponents playing defense — the hopeless game of responding to the latest lies. Today we examine a few of a thousand examples seen during 2012. Other posts in this series:

Today Joe once again goes after the Big Lie — the claim that Fannie and Freddie caused the crisis — and drives home the point that the people advancing this story aren’t just wrong but are acting with intent, engaged in deliberate deception …

Basically, Joe is arriving where I’ve been since 2000: what’s going on in the discussion of economic affairs (and other matters, like justifications for war) isn’t just a case where different people look at the same facts but reach different conclusions. Instead, we’re looking at a situation in which one side of the debate just isn’t interested in the truth, in which alleged scholarship is actually just propaganda.

Saying this, of course, gets you declared “shrill”, denounced as partisan; you’re supposed to pretend that we’re having a civilized discussion between people with good intentions. And you’re supposed to match each attack on Republicans with an attack on Democrats, as if the mendacity were equal on both sides. Sorry, but it isn’t. Democrats aren’t angels; they’re human and sometimes corrupt — but they don’t operate a lie machine 24/7 the way modern Republicans do.

(2) Nocera dares to speak the truth about the big lie

“The Big Lie“, Joe Nocera, op-ed in the New York Times, 23 December 2011 — Excerpt:

So this is how the Big Lie works. You begin with a hypothesis that has a certain surface plausibility. You find an ally whose background suggests that he’s an “expert”; out of thin air, he devises “data.” You write articles in sympathetic publications, repeating the data endlessly; in time, some of these publications make your cause their own. Like-minded congressmen pick up your mantra and invite you to testify at hearings.

You’re chosen for an investigative panel related to your topic. When other panel members, after inspecting your evidence, reject your thesis, you claim that they did so for ideological reasons. This, too, is repeated by your allies. Soon, the echo chamber you created drowns out dissenting views; even presidential candidates begin repeating the Big Lie.

Thus has Peter Wallison {AEI bio}, a resident scholar at the American Enterprise Institute, and a former member of the Financial Crisis Inquiry Commission, almost single-handedly created the myth that Fannie Mae and Freddie Mac caused the financial crisis. His partner in crime is another A.E.I. scholar, Edward Pinto {AEI bio}, who a very long time ago was Fannie’s chief credit officer. Pinto claims that as of June 2008, 27 million “risky” mortgages had been issued — “and a lion’s share was on Fannie and Freddie’s books,” as Wallison wrote recently. Never mind that his definition of “risky” is so all-encompassing that it includes mortgages with extremely low default rates as well as those with default rates nearing 30 percent. These latter mortgages were the ones created by the unholy alliance between subprime lenders and Wall Street. Pinto’s numbers are the Big Lie’s primary data point.

Allies? Start with Congressional Republicans, who have vowed to eliminate Fannie and Freddie — because, after all, they caused the crisis {see this for details}! Throw in The Wall Street Journal’s editorial page, which, on Wednesday published one of Wallison’s many articles repeating the Big Lie. It was followed on Thursday by an editorial in The Journal making essentially the same point. Repetition is all-important to spreading a Big Lie.

In Wallison’s article, he claimed that the charges {NYT article} brought by the Securities and Exchange Commission against six former Fannie and Freddie executives last week prove him right. This is another favorite tactic: He takes a victory lap whenever events cast Fannie and Freddie in a bad light. Rarely, however, has his intellectual dishonesty been on such vivid display. In fact, what the S.E.C.’s allegations show is that the Big Lie is, well, a lie.

Central to Wallison’s argument is that the government’s effort to encourage homeownership among low- and moderate-income Americans is what led to the crisis. Fannie and Freddie, which were required by law to meet certain “affordable housing mandates,” were the primary instruments of that government policy; their need to meet those mandates, says Wallison, is what caused them to dive so heavily into those “risky” mortgages. And because they were powerful forces in the housing market, their entry into subprime dragged along the rest of the mortgage industry.

But the S.E.C. complaint makes almost no mention of affordable housing mandates. Instead, it charges that the executives were motivated to begin buying subprime mortgages — belatedly, contrary to the Big Lie — because they were trying to reclaim lost market share, and thus maximize their bonuses.

(3) Other posts about the housing crisis — shifting the blame, an example of successful propaganda

23 thoughts on “More use of the big lie: shifting the blame for the housing crisis”

Alright, but mostly it’s a straw man. As far as blame for the problems on Wall Street, Obama is President and he’s in charge of the Justice department. He doesn’t need the approval of right-wing pundits in order to prosecute anyone on Wall Street. He even said, which I find amazing, that most of what happened was legal, yet anyone who knows anything about the robo-signing cases knows that there’s massive evidence of forged court documents filed all across this country. How does this happen without systemic disregard for the law in the banking system? That’s just one issue, and it’s blatantly criminal, yet, the government is all worried about what kind of tiny fine to make the banks pay. Fine? This should be prison time. Prosecution is a joke right now.

Here is a prominent businessman, and former elected democrat, HEAD OF THE FINANCIAL INQUIRY COMMISSION, Phil Angelidies, complaining that Obama has not prosecuted the corporate criminals behind the economic collapse: “The financial crisis, the housing market, and economic recovery“, Phil Angelides on Studio Sacramento at KVIE TV, 23 December 2011. The video is a real eye opener.

Angelidies does not adequately answer the question of why Obama has failed to prosecute the corporate criminals, but he does remind the viewer that THOUSANDS of such corporate criminals were prosecuted and jailed for their roles in the 80s “Saving and Loan” scandals. Angelidies, like many greek-americans in northern california, is a real estate developer, and probably knew lot of people that were prosecuted for the S&L scandal. He does say that the Comission made a lot of “referrals” to the Federal DoJ that he hopes will result in prosecutions.

Angelidies does not mention that Obama got huge support from Wall street, but he does express outrage about the overwhelming amount of lobbying money ($50 million in one quarter of 2011!) spent by opponents of bank reform in Washington D.C.

My guess is that Obama’s strategists have advised him that he can’t win a fight against the finance industry’s lobbyists. At least not right now. Or maybe thay are waiting to “announce” such prosecutions at a time in the election cycle that will maximise the damage to Republicans?

Or, worse, maybe there are too many other Democrats in D.C. that have taken money from the finance industry lobby, and are afraid of it?

Scott Syphax is the President and CEO of Nehemiah Corporation of America (NCA), a not-for-profit community development corporation in Sacramento, CA. Through the Nehemiah Community Reinvestment Fund, NCA has leveraged over $880 million in projects to spur development in low-income and underserved communities. NCA is the nation’s oldest and largest provider of private downpayment assistance. Through its flagship program, the Nehemiah Program, NCA has provided more than $1.5 billion in downpayment assistance gift funds to help over 320,000 families achieve their dream of homeownership.

This isn’t the only cause, but I think it’s a major one — and that big financial players steal stuff, and nobody calls them on it. Some of it was complicated, but a lot of it was just fraud. Systemically corrupt banks and a government that is on the take.

It happened again just a few months ago with MF Global, and these even guys steal customer money, and their accounting is such a mess nobody knows where the money went. Corzine makes the Alzheimer’s plea. He has no idea where the money went. What was it 1.2B just disappears? It sure seems, just by reading the news that this was a blatantly criminal enterprise, but yet, like nothing happens? Both parties are hopelessly corrupted, and if you google a bit into Corzine and his history you’ll see that.

It is amazing. Who would have thought we’d be looking back fondly on the Reagan/Bush Justice department — Ed Meese, oh my. Maybe Obama has prosecutions that he’s about to reveal, but if he does, then his little interview was the greatest fake-out acting job of all time. For me, right now, by Occam’s Razor, my guess is that nothing is going to happen, and if he’s re-elected, nothing will continue to happen, and that if someone else elected, nothing will continue to happen. I believe in these cases documentation disappears, memories fade, you have to strike while the trail is still fresh. We’ll see, but I think it’s over.

This is just speculation, but I honestly think Obama just doesn’t have a clue. I didn’t think that before, but after that interview, I’m edging towards the ‘stupid’ rather than the ‘evil’ theory. It’s the revolving door between Wall Street and the US Government, jobs for crazy high salary being offered for service rendered, and all these guys feed Obama, the fool, the tale that nothing illegal has happened.

Overbuilding (ie, vacancy rates) and excessive leverage are sufficient explanations for the inevitable colllapse. The great financial crisis was a cause and effect of the housing bubble burstting — the usual complex dynamics of a global recession. High oil prices were, as usual, a contributing factor.

Since we’re not at peak oil (there are several million b/day of excess capacity), it cannot be a cause. No matter how many times you read this fairy tale on the fringe websites.

Peak Oil doomers seem to blame every current ill on “peak oil”. Recession? Peak Oil. Housing crisis? Peak oil! Rise of inner city violence? Must be peak oil! Hell, they even craft historical narratives to fit their “resource depletion” idea, such as that the Roman Empire collapsed because of resource exhaustion, a narrative that isn’t held by really any credible historian. They seem to live in their own bubble, where their “specialists” (often people who have no authority in whatever field is their hobby like passion) source one another and build upon their literary works (blog posts, sometimes a few low read books) with each others narratives. Kind of interesting really.

Oh I agree Peak Oil will be a reality. I just don’t think the luddite/doomer peak oil culture that’s developed around it’s obsession is really anywhere close to reality. If you examine closely, the majority of peak oil authors (and it’s readership) tend to be people who are around their 40s to 60s, and have deep seated animosity towards what they dub “industrial civilization”. Most of them see “peak oil” as some sort of deliverance event that will usher in their much beloved “agricultural” societal model. Most of them will talk on and on and on about how great life was before industrial civilization and how they can’t wait for it to return.

Some even seem giddy about their “die off” scenarios. Kunstler is a good example of this. He very much wants a return to small town New England style America, and thinks “Peak Oil” will usher this about.

We learned in the 2008 elections that the Clintons had raked in over $100 million dollars after President Clinton left office. Barrack Obama wants his $100 million dollars too. So – there is no possibility of him making any move against the Wall Street swindlers.

Good point! This is an important aspect of our situation. Working for our ruling elites pays far better than opposing them. So they have hordes of advocates willing to skillfully and enthusiatically lie.

Steve Benen {at Washington Monthly} asks why Congressional Republicans were willing to pursue what looked like a “suicidal” political strategy in the payroll tax fight. But he somehow fails to mention an important factor: reliable conservatives are assured of a safe landing even if they are defeated. …

“American politics is little but jousts among factions of the rich”, I forgot who said this; but, he has accurately describe the situation we now reside in.

Our existing political parties will continue to provide us clowns, empty suits, and/or greedy choices to continue the charade, as long as Money is King.

America needs a “Money Spring Event” that drives the power of the monied interests out of the political process. The Sperm Pool winner should have no bigger a voice/vote than the successful millionaire entrepreneur, or the worker bee.

“America needs a ‘Money Spring Event’ that drives the power of the monied interests out of the political process.”

Jesus drove the money changers from the temple. Hoping for His return soon is nice but probably in vain. I suggest that we move beyond stating what we want to happen, and focus on what we need to do — and specific steps to make that happen.

This comes up every time. We hold elections every two years. Nobody puts a gun to our heads, telling us which candidate to choose. You want different outcomes from Congress. Work to elect different people. Our fate lies in our hands. That we’re too lazy and foolish to work the machinery is sad, but our own fault.

“On issues where Congress won’t pass real reforms:
This comes up every time. We hold elections every two years. Nobody puts a gun to our heads, telling us which candidate to choose. You want different outcomes from Congress. Work to elect different people. Our fate lies in our hands. That we’re too lazy and foolish to work the machinery is sad, but our own fault.”

Oh how disappointing your response. You think you can elect people who aren’t or won’t be corrupted by the money. Look at the process, our reps spend an inordinate amount of time looking for the money for their next election. As soon as you wander off of a single issue, you open the door to having to choose between options. We need to focus on the root cause of what is taking the country away from the Constitution and will eventually destroy our freedom…money!

Look at the success Grover has had with a single issue like raising taxes. “Get money out of politics”, as a single issue is supported by the vast majority of the voting public. Support for not raising taxes is easy leveraged because it comes up repeatedly, “no money in politics” is not an issue that repeats itself continually in congressional actions and could be easily leveraged.

Grover started in 1985, I’m 70, I don’t have the time or money that Grover needed to get the power he now holds to get something like a “Money Out of Politics” platform agreed to. We, the concerned, can spent years trying to get a single issue that will have a major impact on who & how we are governed by trying to elect or raise the pressure on those we elect or we can try an out of the box method recommended by the Founders, like a Convention for an Amendment to remove the money from the political process faster.

I rest my case, someone please pick up the banner and help save? this country and our freedom.

Currently, “American politics is little but jousts among factions of the rich”.

So long as we will be sheep, then we will be ruled by wolves. But at least we’ll have first rate excuses! The money made us do it; we couldn’t defend ourselves before all those commercials! Perhaps manufacturing excuses and whines has become America’s primary skill. Well, at least we still make something.

Of course, there are no buyers for excuses and whines.

Somehow our ancestors did great works — such as the Revolution and ending slavery — against horrific odds, without whines and excuses. Perhaps we could learn something from them.

“Somehow our ancestors did great works — such as the Revolution and ending slavery — against horrific odds, without whines and excuses. Perhaps we could learn something from them”

Lot of blood was spent on those two examples. It appears you are proposing another revolution to gain back those Constitutional Freedoms we have lost.

“The original purpose of Article V was to give States the power to circumvent a recalcitrant or corrupt Congress”. Why not give this a chance before the wolves need to rise up and take it back with force?

Perhaps your Observation doesn’t see the misuse of money as the core problem, My Orientation is expected to be different than yours, I say attempt an Article V convention as the first action (and that ain’t whinning), you have said simply vote them out or now it appears, man the barricades. Is this your Plan A & B. Perhaps a better answer is try voting them out while pursuing an Art V. convention; then, possible something more forceful.

(1) “It appears you are proposing another revolution to gain back those Constitutional Freedoms we have lost. ”

That is quite a reading FAIL. From my reply to your first comment (bodl emphasis added):

This comes up every time. We hold elections every two years. Nobody puts a gun to our heads, telling us which candidate to choose. You want different outcomes from Congress. Work to elect different people. Our fate lies in our hands. That we’re too lazy and foolish to work the machinery is sad, but our own fault.

No need for shedding blood, no drama queen theactics.

(2) “Perhaps a better answer is try voting them out while pursuing an Art V. convention”

IMO that’s a rediculous fantasy, one of the many Americans devise to avoid the long difficult work of re-taking our political machinery. The posts I cited give a detailed anlysis.

(3) “Perhaps your Observation doesn’t see the misuse of money as the core problem,Perhaps your Observation doesn’t see the misuse of money as the core problem,”

“You want different outcomes from Congress. Work to elect different people. Our fate lies in our hands. That we’re too lazy and foolish to work the machinery is sad, but our own fault.”

How is that dream working out for you? Who is whinning now, get your head out of the sand. Your point I guess is we are lazy. In general, yea I can buy that. Admitting that doen’t solve the problem. You think the problem is laziness. I think it’s money.

Tell me, based on the comments you have from people far smarter than both of us, how long does it take for the lazy to wake up and take action? My Orientation says if there is blood in the street the interest level will rise. You appear naive to that possibility? Remember your statement that, “Somehow our ancestors did great works — such as the Revolution and ending slavery — against horrific odds”, I’m trying to avoid that bloodshed.

IMHO your unwillingness to pursue Art V. as part of the solution, without trying it, is the equivalent of avoiding flight unless the wings are flapping.

We’ve beat this to death, let’s move on. I never expected total agreement on this. After all, I went to my war for the excitement, challenge to see if I would run, and the chicks! A different Orientation.

How long does any large-scale poltical project take? How long did the revolution take? How long from the first anti-slavery society until the abolution of slavery in America? (see the comment above for answers). Big things take time.

(2) “How is that dream working out for you?”

I have no idea what you are attempting to say with that. It’s like mocking Samuel Adams in 1765 about that “revolution thing.”

(3) “Admitting that doen’t solve the problem.”

I suggest you read some literature from AA, for example. Admiting the problem is the first step to solving it.

(4) “I think it’s money.”

Does the money force you to watch and believe commercials? Does it put a gun to your head in the voting both? As excuses go, it’s weak.

(5) “My Orientation says if there is blood in the street the interest level will rise.”

I dont’ know what that means. Probably I don’t want to know what that means. It’s become a commonplace in the US, talking about spilling blood as a solution to poltical problems. As one military expert told me, when I questioned our intervention in Libya, “You just have not seen enough blood spilled.” It’s another symptom of our pathology, of our ignorance of history. Spilling blood works to produce political reform as cyanide works as a pain-killer.

(6) “You appear naive to that possibility?”

Another example of someone reading one (or a few posts) and making broad statements about the content of this website. Absurdly false. Quite a few posts discuss the potential for violent regime failure.

(7) “your unwillingness to pursue Art V. as part of the solution … We’ve beat this to death”

You’ve not mentioned (or shown any awareness of) the arguements against that path. Why not read the post which provides detailed analysis of that option, then post a rebuttal there. It’s off-topic here.